24 HќќѠіђџȱ юћјђџ Ѣћђȱ2014 ',5(&7256 6(1,25 0$1$*(0(17 Companies of all kinds are continually trying to cut costs, ȱĜǰȱȱȱ products and services to create more value. Financial institutions are no ěǯȱ ǰȱȱȱ ǰȱęȱȱȱ risks and regulations that constantly challenge their ability to drive operational costs down and improve ę¢ǯ As the number and severity of risks grow, managing risk has all but consumed management. At the ȱǰȱȱęȱȱ have developed bad habits, such as practicing risk management in “silos” — areas that operate in isolation from ȱȯȱȱȱĜȱȱ increased costs. By establishing an integrated and holistic enterprise-wide risk management program that is repeatable, process-driven and aligned with business development ¢ǰȱ¢ȱęȱȱ can establish a program to achieve ęȱȱȱȱ Ĝǯ Why Is Risk Management Important? ȱęȱȱ¢ȱ and its regulators have become exceedingly risk-focused over the ȱǯȱ ȱȱ ȱ adopt more modern practices and methods in assessing and mitigating risk, while discarding outmoded ways of evaluating and controlling risks and controls. Regulators today are taking a hard ȱȱ ȱęȱȱ are integrating various risk areas, previously viewed as disparate: interest-rate risk, liquidity risk, compensation risk, market risk, operational risk and reputational risk. Regulators also are focusing not only on money center banks, but also on community banks. The outcomes of risk management programs practiced at smaller institutions are ȱěȱȱȱȱȱǰȱ though the risk activities are scaled to the complexity of the institutions. The Challenge of Current Risk Management Practices ȱ ȱǰȱȱęȱ institutions will claim to have risk management practices. Yet in reality, many assess the full spectrum of their risks in silos. This isolated approach can weaken an institution by: % Driving up costs; % Limiting the institution’s ability to practice sound governance and compliance; % ȱȱȱěȱȱ duplicity of tools; % ȱȱȱ technologies; % ȱȱȱȱ inconsistencies; % Under-allocating management to some high-risk areas. A Clearer Picture of ERM An enterprise-wide risk ȱǻ Ǽȱȱ essentially is a management technique that allows community- ȱęȱȱȱȱ ȱĜȱȱĴȱȱȱ compete in an increasingly complex environment. The basic elements of a risk management program already ¡ȱȱ¢ȱęȱȱ in the form of policies, risk assessments, monitoring programs яќѢѡȱѡѕђȱ Ѣѡѕќџ Bharat Nair leads product and technology strategy at WolfPAC Integrated Risk Management, an enterprise risk management solution that automates ȱęȱȱǰȱȱȱȱǯȱ He previously served in senior management positions with various other technology organizations, ȱ ęȱ ¢ǰȱ ȱ ȱȱ Brooks Automation. Nair earned advanced degrees from Boston University and from the South Dakota ȱȱ ȱȱ ¢ȱȱȱĴȱȱȱ ęǯȱ ȱȱȱȱȱȱŜŗŝȬŚřşȬşŝŖŖǰȱDZȱȓ ¢ǯǯȱ ȱ ȱ ȱ ȱȱȱ associate member of the Indiana Bankers Association. How ERM Can Help Your Institution
RkJQdWJsaXNoZXIy MTg3NDExNQ==